PCAOB Inspection Report of Plante & Moran, PLLC - Public ...

1666 K Street, N.W.
Washington, DC 20006
Telephone: (202) 207-9100
Facsimile: (202) 862-8430
www.pcaobus.org
Inspection of
Plante & Moran, PLLC
Issued by the
Public Company Accounting Oversight Board
March 14, 2007
THIS IS A PUBLIC VERSION OF A PCAOB INSPECTION REPORT
PORTIONS OF THE COMPLETE REPORT ARE OMITTED
FROM THIS DOCUMENT IN ORDER TO COMPLY WITH
SECTIONS 104(g)(2) AND 105(b)(5)(A)
OF THE SARBANES-OXLEY ACT OF 2002
PCAOB RELEASE NO. 104-2007-033

PCAOB Release No. 104-2007-033
Notes Concerning this Report
1. Portions of this report may describe deficiencies or potential deficiencies in the systems,
policies, procedures, practices, or conduct of the firm that is the subject of this report.
The express inclusion of certain deficiencies and potential deficiencies, however, should
not be construed to support any negative inference that any other aspect of the firm's
systems, policies, procedures, practices, or conduct is approved or condoned by the
Board or judged by the Board to comply with laws, rules, and professional standards.
2. Any references in this report to violations or potential violations of law, rules, or
professional standards should be understood in the supervisory context in which this
report was prepared. Any such references are not a result of an adversarial adjudicative
process and do not constitute conclusive findings of fact or of violations for purposes of
imposing legal liability. Similarly, any description herein of a firm's cooperation in
addressing issues constructively should not be construed, and is not construed by the
Board, as an admission, for purposes of potential legal liability, of any violation.
3. Board inspections encompass, among other things, whether the firm has failed to
identify departures from Generally Accepted Accounting Principles ("GAAP") in its audits
of financial statements. This report's descriptions of any such auditing failures
necessarily involve descriptions of the related GAAP departures. The Board, however,
has no authority to prescribe the form or content of an issuer's financial statements.
That authority, and the authority to make binding determinations concerning an issuer's
compliance with GAAP, rests with the Securities and Exchange Commission ("SEC" or
"Commission"). Any description, in this report, of perceived departures from GAAP
should not be understood as an indication that the Commission has considered or made
any determination regarding these GAAP issues unless otherwise expressly stated.

PCAOB Release No. 104-2007-033
INSPECTION OF PLANTE & MORAN, PLLC
The Public Company Accounting Oversight Board ("PCAOB" or "the Board") has
conducted an inspection of the registered public accounting firm Plante & Moran, PLLC
("the Firm"). The Board is issuing this report of that inspection in accordance with the
requirements of the Sarbanes-Oxley Act of 2002 ("the Act").
The Board is making portions of the report publicly available. Specifically, the
Board is releasing to the public Part I of the report and portions of Part IV of the report.
Part IV of the report consists of the Firm's comments, if any, on a draft of the report. 1/
The Board has elsewhere described in detail its approach to making inspectionrelated
information publicly available consistent with legal restrictions. 2/ A substantial
portion of the Board's criticisms of a firm (specifically criticisms of the firm's quality
control system), and the Board's dialogue with the firm about those criticisms, occurs
out of public view, unless the firm fails to make progress to the Board's satisfaction in
addressing those criticisms. In addition, the Board generally does not disclose
otherwise nonpublic information, learned through inspections, about the firm or its
clients. Accordingly, information in those categories generally does not appear in the
publicly available portion of an inspection report.
1/
The Board does not make public any of a firm's comments that address a
nonpublic portion of the report. In addition, pursuant to section 104(f) of the Act, 15
U.S.C. § 7214(f), and PCAOB Rule 4007(b), if a firm requests, and the Board grants,
confidential treatment for any of the firm's comments on a draft report, the Board does
not include those comments in the final report at all. The Board notes that it routinely
grants confidential treatment, if requested, for any of a firm's comments that identify
factually inaccurate statements in the draft that the Board corrects in the final report.
2/
See Statement Concerning the Issuance of Inspection Reports, PCAOB
Release No. 104-2004-001 (August 26, 2004).

PCAOB Release No. 104-2007-033
Inspection of Plante & Moran, PLLC
March 14, 2007
Page 2
PART I
INSPECTION PROCEDURES AND CERTAIN OBSERVATIONS
Members of the Board's inspection staff ("the inspection team") conducted
fieldwork for the inspection from November 7, 2005 to November 18, 2005. The
fieldwork included procedures tailored to the nature of the Firm, certain aspects of which
the inspection team understood at the outset of the inspection to be as follows:
Number of offices 18 3/
Ownership structure
Professional limited liability
company
Number of partners 201
Number of professional staff 4/ 928
Number of issuer audit clients 5/ 33
Board inspections are designed to identify and address weaknesses and
deficiencies related to how a firm conducts audits. To achieve that goal, Board
3/
The Firm's offices are located in Chicago and Elgin, Illinois; Ann Arbor,
Auburn Hills, East Lansing, Flint, Gaylord, Grand Rapids, Kalamazoo, Mount Clemens,
St. Joseph, Southfield and Traverse City, Michigan; Cleveland, Columbus and Toledo,
Ohio; Nashville, Tennessee; and Shanghai, People's Republic of China.
4/
"Professional staff" includes all personnel of the Firm, except partners or
shareholders and administrative support personnel. The number of partners and
professional staff is provided here as an indication of the size of the Firm, and does not
necessarily represent the number of the Firm's professionals who participate in audits of
issuers or are "associated persons" (as defined in the Act) of the Firm.
5/
The number of issuer audit clients shown here is based on the Firm's selfreporting
and the inspection team's review of certain information for inspection planning
purposes. It does not reflect any Board determination concerning which, or how many,
of the Firm's audit clients are "issuers" as defined in the Act.

PCAOB Release No. 104-2007-033
Inspection of Plante & Moran, PLLC
March 14, 2007
Page 3
inspections include reviews of certain aspects of selected audits performed by the firm
and reviews of other matters related to the firm's quality control system.
In the course of reviewing aspects of selected audits, an inspection may identify
ways in which a particular audit is deficient, including failures by the firm to identify, or to
address appropriately, respects in which an issuer's financial statements do not present
fairly the financial position, results of operations, or cash flows of the issuer in
conformity with GAAP. 6/ It is not the purpose of an inspection, however, to review all of
a firm's audits or to identify every respect in which a reviewed audit is deficient.
Accordingly, a Board inspection report should not be understood to provide any
assurance that the firm's audits, or its issuer clients' financial statements, are free of any
deficiencies not specifically described in an inspection report.
A. Review of Audit Engagements
The scope of the inspection procedures performed included reviews of aspects of
the performance of eight of the Firm's audits of the financial statements of issuers.
Those audits and aspects were selected according to the Board's criteria, and the Firm
was not allowed an opportunity to limit or influence the selection process.
The inspection team identified matters that it considered to be audit
deficiencies. 7/ The deficiencies identified in four of the audits reviewed included
deficiencies of such significance that it appeared to the inspection team that the Firm
6/
When it comes to the Board's attention that an issuer's financial
statements appear not to present fairly, in a material respect, the financial position,
results of operations or cash flows of the issuer in conformity with GAAP, the Board
reports that information to the SEC, which has jurisdiction to determine proper
accounting in issuers' financial statements.
7/
PCAOB standards require a firm to take appropriate actions to assess the
importance of audit deficiencies identified after the date of the audit report to the firm's
present ability to support its previously expressed opinions. See AU 390, Consideration
of Omitted Procedures After the Report Date, and AU 561, Subsequent Discovery of
Facts Existing at the Date of the Auditor's Report (both included among the PCAOB's
interim auditing standards, pursuant to PCAOB Rule 3200T). Failure to comply with
these PCAOB standards could be a basis for Board disciplinary sanctions.

PCAOB Release No. 104-2007-033
Inspection of Plante & Moran, PLLC
March 14, 2007
Page 4
did not obtain sufficient competent evidential matter to support its opinion on the issuer's
financial statements. In each case, that deficiency was the failure to perform and
document sufficient audit procedures regarding the allowance for loan losses.
B. Review of Quality Control System
In addition to evaluating the quality of the audit work performed on specific
audits, the inspection included review of certain of the Firm's practices, policies and
procedures related to audit quality. This review addressed practices, policies and
procedures concerning audit performance, training, compliance with independence
standards, client acceptance and retention, and the establishment of policies and
procedures. As described above, any defects in, or criticisms of, the Firm's quality
control system are discussed in the nonpublic portion of this report and will remain
nonpublic unless the Firm fails to address them to the Board's satisfaction within 12
months of the date of this report.
END OF PART I

PCAOB Release No. 104-2007-033
Inspection of Plante & Moran, PLLC
March 14, 2007
Page 5
PARTS II AND III OF THIS REPORT ARE NONPUBLIC
AND ARE OMITTED FROM THIS PUBLIC DOCUMENT

PCAOB Release No. 104-2007-033
Inspection of Plante & Moran, PLLC
March 14, 2007
Page 6
PART IV
RESPONSE OF THE FIRM TO DRAFT INSPECTION REPORT
Pursuant to section 104(f) of the Act, 15 U.S.C. § 7214(f), and PCAOB Rule
4007(a), the Board provided the Firm an opportunity to review and comment on a draft
of this report. The Firm provided a written response.
Pursuant to section 104(f) of the Act and PCAOB Rule 4007(b), if a firm requests,
and the Board grants, confidential treatment for any of the firm's comments on a draft
report, the Board does not include those comments in the final report. The Board
routinely grants confidential treatment, if requested, for any of a firm's comments that
identify factually inaccurate statements in the draft that the Board corrects in the final
report.
Pursuant to section 104(f) of the Act and PCAOB Rule 4007(b), the Firm's
response, minus any portion granted confidential treatment, is attached hereto and
made part of this final inspection report. In any version of this report that the Board
makes publicly available, any portions of the Firm's response that address nonpublic
portions of the report are omitted.